It’s all about those brick-and-mortar retailers that have been battling for their very existence. They now face the prospects of a dagger via a border-adjustment tax. A group of retail CEOs will meet with President Trump at the White House to discuss taxes, business conditions, and survival. Their pitch will be simple:

Americana – Most of them operate in every state (a few in 49), and have histories that go back as far as 100 years.

Year

Store

Effective Tax Rate

1901

Walgreens

17.3%

1902

JC Penny

4.7%

1902

Target*

33.8%

1938

Tractor Supply

36.0%

1943

Joe Ann Fabrics

NA

1966

Best Buy**

36.7%

1969

Gap Stores

45.1%

1979

AutoZone

34.7%

Workers/Jobs- These companies employ hundreds of thousands of workers, forcing them into massive layoffs. It goes against everything President Trump promised.

Affordability – These companies sell the clothes that workers in the heartland will need as they return to factory jobs.

There will be a lot of individual stories and pitches, including Walgreens, reminding the White House they could have moved their headquarters to Switzerland after the merger with Alliance Boots, but it instead stayed in Deerfield, Illinois.

Meanwhile, it takes a lot of chutzpah for big exporters, such as General Electric (GE) and Boeing (BA) to push for a border-adjustment tax, considering all the breaks they receive such as corporate welfare via the Import – Export Bank.

In addition, most of these retailers pay an effective tax rate north of 30% which means limited returns for investors. On the other hand, in the most recent quarter, Boeing paid an effect tax rate of 12.0%; and GE had earnings before income tax of $2.89 billion, then a ‘benefit’ rather than tax of $766 million that brought its net income to $3.66 billion.

At this point, the scenario has become akin to David and Goliath, and I think there is a chance for everyone to succeed.